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CIRCULAR

GUIDING THE IMPLEMENTATION OF ARTICLE 12 OF THE GOVERNMENT'S DECREE NO. 39/2003/ND-CP OF APRIL 18, 2003, DETAILING AND GUIDING A NUMBER OF ARTICLES OF THE LABOR CODE REGARDING EMPLOYMENT

THE MINISTRY OF LABOR, WAR INVALIDS AND SOCIAL AFFAIRS

Pursuant to the Government's Decree No. 39/2003/ND-CP of April 18, 2003, detailing and guiding a number of articles of the Labor Code regarding employment;

Pursuant to the Government's Decree No. 127/2008/ND-CP of December 12, 2008, detailing and guiding a number of articles of the Law on Social Insurance regarding unemployment insurance;

Pursuant to the Government's Decree No. 186/2007/ND-CP of December 25, 2007, defining the functions, tasks, powers and organizational structure of the Ministry of Labor, War Invalids and Social Affairs;

The Ministry of Labor, War Invalids and Social Affairs guides the implementation of Article 12 of the Government's Decree No. 39/2003/ND-CP of April 18, 2003, detailing and guiding a number of articles of the Labor Code regarding employment (below referred to as Decree No. 39/2003/ND-CP) as follows:

Article 1. The job loss allowance level prescribed in Article 12 of Decree No. 39/2003/ND-CP is guided as follows:

1. Formula for calculation of job loss allowance:

Job loss allowance

=

Number of years counted for enjoyment of job loss allowance

x

Salary used for calculating job loss allowance

x

1

In which:

- The number of years counted for enjoyment of job loss allowance (counted in years) is the whole period of time the laborer has actually worked for the employer until he/she loses his/ her job subtracting the duration for which the laborer pays unemployment insurance premiums under Article 41 of the Government's Decree No. 127/2008/ND-CP of December 12, 2008, detailing and guiding a number of articles of the Social Insurance Law regarding unemployment insurance. In case the whole period of time the laborer has actually worked for the employer includes odd months (even when the laborer has worked for the employer for full 12 months or more, but his/her total working time counted for enjoyment of job loss allowance is less than 12 months), this period may be rounded up as follows:

+ The period of less than one (1) month shall not be counted for enjoyment of job loss allowance;

+ The period of between one (1) month and under six (6) months shall be rounded up to six (6) months of work for enjoyment of a job loss allowance equal to half (1/2) month's salary;

+ The period of full six (6) months or more shall be rounded up to one (1) year of work for enjoyment of a job loss allowance equal to one (1) month's salary.

- Salary which is used for calculating job loss allowances under labor contracts is the average salary or wage of 6 consecutives months before the laborer loses his/her job, including rank- or position-based salary or wage and region- or position-based allowance (if any).

- 1 (one) is one month's salary for each year of work.

- The lowest job loss allowance level is equal to two (2) months' salaries, except laborers whose period of time counted for enjoyment of job loss allowance is less than one (1) month.

2. Job loss allowance upon implementation of unemployment insurance:

The duration for which laborers pay unemployment insurance premiums under Clause 1, Article 41 of the Government's 1 Decree No. 127/2008/ND-CP of December 12, 2008, will not be counted for enjoyment of job loss allowance. The salary or wage which is used for calculating job loss allowance is the average salary or wage of 6 consecutive months indicated in the labor contract before the laborer loses his/ her job. including rank- or position-based salary or wage and region- or position-based allowance (if any).

Article 2. Implementation provisions

1. This Circular takes effect 45 days from the date of its signing.

2. The method of calculation of job loss allowance shall be applied on January 1, 2009 (the effective date of the Government's Decree No. 127/2008/ND-CP of December 12, 2008).

3. The method of calculation of job loss allowance under this Circular is not applied to labor contracts that terminate before January 1, 2009.

4. Any problem arising in the course of implementation should be reported to the Ministry of Labor, War Invalids and Social Affairs for timely study and additional guidance.